Where debit cards are used is evident from the Card Expenditure
Statistics (CES)6that are reported to The UK Cards Association by
merchant acquirers, i.e, those banks and other institutions that process plastic card transactions on behalf of businesses and enterprises in the UK. These data are divided into 12 categories (shown in the pie charts opposite); the grey shaded categories encompass retailers which together very closely correspond to the Retail Sales sector published by National Statistics, and the brown-shaded categories correspond to the services sector. There is a step change between 2010 and 2011 due to a change in the reporting population introduced in 2011. This change expanded the coverage of CES. As at end 2012 the coverage was 99.8% by volume and 98.8% by value. A more detailed breakdown is available from The UK Cards Association. These data are available monthly throughout the year; details can be found at:
http://www.theukcardsassociation.org.uk/2012-factsfigures/index.asp Debit card payments received by UK merchants, retailers and service providers increased by 6.6% to £348 billion in 2012; the total number of purchases grew by 9.2% to stand at 7.9 billion. As a result the ATV decreased by £1.09 to £44.12. Higher growth rates in volumes relative to values were evident in both retail sales and services sectors. Retail sales spending increased by 6.9% to £176 billion with volumes increasing by 7.2% to 5.7 billion. Debit cards reached a milestone in 2012 averaging 50% of all retail sales spending, up from an average of 48% in 2011. Spending on services increased by 6.3% to £171 billion with volumes increasing by 15% to 2.2 billion. Higher rates of growth in volumes can perhaps be explained by an increase in online spending and continued migration from cash and cheques.
The retail sales sector recorded an ATV decrease of just 8p to £31.12, which compares to a larger decrease of £6.20 to £77.45 in services. Within retail sales, food and drink and mixed business recorded decreases in ATVs. The ATV for food and drink decreased by 78p to £26.27 and could be attributable to a number of factors. These include the on-going competition between the major supermarkets coupled with the growing prominence of smaller supermarket chains that predominantly specialise in offering cheaper products. The continuing squeeze on disposable incomes was another factor. The ATV for the mixed business sub-sector decreased by 33p to £34.38 possibly due to consumer budgeting and bargain hunting.
There were however rises in the ATVs for other sub-sectors within retail sales: clothing increased from £33.81 to £34.55, household increased from £55.25 to £57.65, other retailers increased from £31.25 to £32.26 and automotive fuels increased from £30.01 to £30.82. The increase in the ATV in these sub-sectors was most likely due to relative high inflation in 2012. This would have caused values to increase at a higher rate than volumes thereby increasing the ATVs. For example, the amount of debit card spend on clothing increased by 9.0% while volumes increased by 6.6% in 2012.
However, despite off-setting movements in ATVs, using debit cards, within retail sales sub-sectors the overall ATV for the sector has been decreasing in recent years. This is evident in the widening gap between changes in the average price of a debit card purchase and the headline measures of price inflation (CPI and RPI). These gaps have widened due to the increasing number of lower value transactions particularly in the food and drink sub-sector.
6The acquirers’ figures cover all Visa and MasterCard plastic card sales in the UK and include transactions made on foreign-issued cards, for example, by tourists and other visitors to the UK. The CES
data (reported at monthly intervals) are seasonally adjusted at the aggregate sector (e.g, retail sales) and sub-sector levels (e.g, food and drink, other services), but data for individual merchant categories (e.g, restaurants, supermarkets) are unadjusted
%
Debit card retail sales
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 CPI RPI 5 4 3 2 1 0 -1 -2 -3 Chart 3.5
Changes in debit card average transaction values compared to official price indices
Similarly, although there was an overall decrease in the ATV within services, there were variations by sub-sector. The ATV in vehicle sales and services decreased from £251.57 to £236.85, entertainment fell from £23.50 to £21.49, other services decreased from £91.72 to £86.81 and financial services fell, from £324.95 to £310.79. Tightening budgets by consumers and businesses given the uncertain economic and financial climate could explain the decreases in the ATV for these sub-sectors.
Conversely, the ATV in the hotels sub-sector increased by £3.12 from £90.30 to £93.42 while that in the travel sub-sector increased from £78.12 to £78.38. These increases may be directly related to the boost to tourism from The 2012 Olympic Games but this would be difficult to quantify.
Food and drink 75 Mixed business 16 Clothing 16 Household 22 Other retailers 25 Automotive fuels 23 Entertainment 23 Hotels 4 Travel 21 Financial 50 Other services 49 Vehicle sales 24 Chart 3.6
Spending on debit cards (£ billions) by sub-sector 2012
Total £348 billion
Food and drink 2,836 Mixed business 479 Clothing 455 Household 377 Other retailers 761 Automotive fuels 758 Entertainment 1,068 Hotels 48 Travel 266 Financial 161 Other services 567 Vehicle sales 100 Chart 3.7
Number of debit card purchases (millions) by sub-sector 2012
Total 7,877 million
The proportion of plastic card volumes accounted for by debit cards stood at 77% in 2012, with debit card expenditure accounting for 69%. These proportions were unchanged on 2011. The high proportion of plastic card use and expenditure accounted for by debit cards can be attributed to a number of factors: the high levels of holdings across the population, with nine in ten adults owning a debit card; extensive coverage of merchants with point-of-sale terminals that accept plastic cards; and the on-going migration from cash, cheques and credit cards to debit cards.
The food and drink sub-sector was the most popular for debit card usage in 2012, growing by 11% to 2.8 billion purchases and accounting for 36% of all debit card usage. In the decade to 2012 this percentage has barely changed, and has always accounted for the highest proportion of debit card usage amongst the various sub-sectors. Corresponding values grew by 7.6% to £75 billion representing just over a fifth of all debit card expenditure. In terms of usage, supermarkets accounted for the majority of spending in this sub-sector in 2012 with 99% of the total.
The next most popular sub-sector for debit card usage was entertainment, which grew by 21% to 1.1 billion purchases and accounted for 14% of all debit card transactions during the year. Corresponding values grew by 11% to £23 billion accounting for 7% of all debit card spending. In terms of debit card usage, the three largest merchant categories in this sub-sector were restaurants (54%), gambling (22%) and public houses (10%). Jointly they accounted for 86% of debit card use amounting to approximately 926 million purchases, up from 755 million in 2011. Corresponding values amounted to around £18 billion, up on the £16 billion spent in 2011. It is likely that the majority of spending linked to The 2012 Olympic Games was in the entertainment sub-sector, but this would be difficult to quantify.
The third most popular sub-sector for debit card usage in 2012 was other retailers, which is made up of twenty five separate merchant categories. In terms of debit card usage the biggest merchant categories were chemists (28%) sports shops (12%) and books, newspapers and magazines (11%). Together these accounted for just over half of all debit card usage totalling 386 million purchases, amounting to £8.5 billion. Relatively high debit card usage in sports shops, with growth of approximately 7% in both volumes and values, could be directly linked to increased interest in sports related activity and merchandise following The 2012 Olympic Games and the Euro 2012 football championship. However, ‘other retail’ was the only sub-sector that recorded a decline in transaction volumes, which decreased by 2.3% to 761 million after increasing by 6.2% in 2011. In contrast, values increased by 0.8% to £25 billion following an increase of 3.3% in 2011. Subdued transaction activity was perhaps a reflection of the uncertain economic climate given this sub-sector comprises of merchant categories that are predisposed to discretionary spending.
The three tables that follow show the top ten merchant categories for debit card use during 2012, and the comparable figures for 2011, ranked according to the number of purchases, the total amount spent, and the average value of a transaction.
2012 2011
Location Purchases Value ATV (£) Purchases Value ATV (£)
(millions) (£ billions) (millions) (£ billions)
Supermarkets 2,605 70.1 26.91 2,354 65.3 27.72 Automotive fuels 758 23.3 30.81 730 21.9 30.00 Restaurants 580 10.6 18.34 476 9.2 19.33 Family clothing 301 10.0 33.15 277 9.1 32.69 Gambling 238 4.5 18.94 193 4.7 24.60 Chemists 213 3.3 15.63 203 3.2 15.67 Railways 198 4.8 24.28 174 4.1 23.67 DIY stores 182 8.8 48.42 186 8.5 45.64 Miscellaneous foodstores 168 3.2 19.12 150 2.8 18.87 Department stores 166 6.0 36.76 169 6.0 35.39 Table 3.1
Top ten merchant categories for debit card usage for 2011 and 2012 – based on number of purchases
2012 2011
Location Value Purchases ATV (£) Value Purchases ATV (£)
(£ billions) (millions) (£ billions) (millions)
Supermarkets 70.1 2,605 26.91 65.3 2,354 27.72
FI’s – merchandise & services 33.6 102 329.72 29.4 91 322.53
Automotive fuels 23.3 757 30.81 21.9 730 30.00 Vehicle sales 13.6 16 860.51 12.4 12 1,006.89 Government services 12.8 72 178.39 15.4 65 236.94 Restaurants 10.6 580 18.34 9.2 476 19.33 Travel agents 10.6 18 572.63 10.0 18 547.85 Family clothing 10.0 301 33.15 9.1 277 32.69 DIY stores 8.8 182 48.42 8.5 186 45.64
Auto repair shops 6.4 19 345.28 6.4 18 362.96
Table 3.2
Top ten merchant categories for debit card usage for 2011 and 2012 – based on value of purchases
2012 2011
Location ATV (£) Purchases Value ATV (£) Purchases Value
(millions) (£ billions) (millions) (£ billions)
Security brokers and dealers 3,230.14 3.13 0.97 3,274.10 3.53 1.08
Tax payments 1,523.62 3.17 2.08 1,795.54 3.32 1.85
Vehicle sales 860.51 13.61 15.82 1,006.89 12.44 12.36
Travel agents 572.63 10.58 18.47 547.85 9.96 18.18
Legal services 511.86 0.90 1.76 537.38 0.80 1.49
Tax preparation services 446.54 0.01 0.02 203.10 0.00 0.01
Auto repair shops 345.28 6.43 18.62 362.96 6.44 17.73
FI’s – merchandise & services 329.72 33.56 101.79 322.53 29.43 91.24
Timeshares 293.49 0.10 0.34 137.56 0.01 0.04
Telegraph services / Wire transfer money order 291.38 0.21 0.71 327.07 0.17 0.52
Table 3.3
Top ten merchant categories for debit card usage for 2011 and 2012 – based on average transaction value
There were few changes in the rankings by volume when comparing 2012 to 2011. The top four merchant categories are unchanged from last year. The most popular use for debit cards was on food and drink products at supermarkets which saw an increase of 11% to 2.6 billion purchases but also a decrease in the ATV from £27.72 to £26.91. The fall in the ATV as previously mentioned may have been due to a number of factors such as competition between the major supermarkets and the continuing squeeze on disposable incomes. The number of debit card purchases for automotive fuels increased by 3.8% with an increase in the ATV from £30.00 to £30.81, perhaps reflecting fuel price inflation during the year. All other merchant categories recorded increased volumes with the exception of DIY stores and department stores. The number of purchases at DIY stores fell by 2.2% to 182 million while the number of purchases at department stores declined by 1.2% to 166 million.
Only the top three merchant categories were unchanged between 2011 and 2012 when taking into account rankings by value. The highest amount of spending in 2012 was seen in supermarkets with a recorded spend of £70 billion, up 7.4%
on 2011. This was significantly higher than the next highest ranked merchant category, products and services for financial institutions, which increased by 14% to just under £34 billion. Most other merchant categories recorded increased spending with the exception of government services, which declined by 17% and auto repair shops which saw no growth. Although debit card spend on vehicle sales increased by 9.4% to approximately £14 billion the ATV decreased by £146.38 to £860.51.
Security brokers and dealers and tax payments were the only unchanged merchant categories when comparing ATV rankings between 2011 and 2012. Funeral services and cash disbursements from financial institutions were replaced by tax preparation services and timeshares. Noticeably, there were significant differences in the ATVs of some merchant categories between 2011 and 2012. The biggest increases in ATVs were recorded in tax preparation services and timeshares which rose by £243.44 and £155.94 respectively. In contrast the ATVs for tax payments and vehicle sales recorded the largest falls, decreasing by £271.91 and £146.38 respectively.
There were more than one million more debit card holders in 2012 than there were in 2011. This is broadly equivalent to the increase seen year-on-year since 2002. The total number is now just below 47 million, meaning more than nine in ten of the adult population now has at least one debit card. Population growth is one reason for the increase but over the last decade or so stronger influences have been continued uptake of current accounts and greater issuance of debit cards on basic bank accounts. There were more than 8.5 million more debit card holders in 2012 than there were in 2002.
Overall debit card penetration is very high. However, individuals from some demographic groups are more likely to be cardholders than others. Almost all of those in full-time employment have debit cards. Perhaps unsurprisingly, given bank account holding among those in work is virtually universal. Employers tend to require staff to have their salaries and wages paid to bank accounts. At the other end of the employment scale, debit card holding is lower among those looking for work. This reflects lower levels of current account holding with job seekers, with over one in five having a Post Office Card Account as their main account.
A d u lt s m il li o n s 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 0 10 20 30 40 50 5 15 25 35 45